Correlation Between Soditech and Soc Centrale
Can any of the company-specific risk be diversified away by investing in both Soditech and Soc Centrale at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Soditech and Soc Centrale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soditech SA and Soc Centrale Bois, you can compare the effects of market volatilities on Soditech and Soc Centrale and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Soditech with a short position of Soc Centrale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soditech and Soc Centrale.
Diversification Opportunities for Soditech and Soc Centrale
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Soditech and Soc is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Soc Centrale Bois in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soc Centrale Bois and Soditech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Soditech SA are associated (or correlated) with Soc Centrale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soc Centrale Bois has no effect on the direction of Soditech i.e., Soditech and Soc Centrale go up and down completely randomly.
Pair Corralation between Soditech and Soc Centrale
Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Soc Centrale. But the stock apears to be less risky and, when comparing its historical volatility, Soditech SA is 2.86 times less risky than Soc Centrale. The stock trades about -0.29 of its potential returns per unit of risk. The Soc Centrale Bois is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 840.00 in Soc Centrale Bois on August 29, 2024 and sell it today you would earn a total of 15.00 from holding Soc Centrale Bois or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soditech SA vs. Soc Centrale Bois
Performance |
| Timeline |
| Soditech SA |
| Soc Centrale Bois |
Soditech and Soc Centrale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soditech and Soc Centrale
The main advantage of trading using opposite Soditech and Soc Centrale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech position performs unexpectedly, Soc Centrale can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Soc Centrale will offset losses from the drop in Soc Centrale's long position.The idea behind Soditech SA and Soc Centrale Bois pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Soc Centrale vs. Immobiliere Dassault SA | Soc Centrale vs. Fonciere Inea | Soc Centrale vs. Selectirente | Soc Centrale vs. Groupe Partouche SA |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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